Invest rather than spend money on Christmas gifts

Based on past years, it is expected that adults will spend over $800 this year on Christmas gifts. Over the last decade, people have been spending over $700 and now more recently over $800, and the amount spent is expected to increase in the future due to the improved economy and the “growth” of the holiday. Rather than spend over $800 on toys, clothes, etc., why not take a percentage of that and invest it for either your own or a child’s future? That would be a great Christmas gift.

Consider the fact that the average American household has only $5000 saved for retirement per the Federal Reserve’s Survey of Consumer Finances. Other survey’s show similar results and also reflect that a large percentage of American families have either no money saved for retirement or very little.

In addition to that, Bankrate reports that 2/3 Americans have zero dollars saved for an emergency. So when faced with these dire financial conditions, people still plan on spending over $800 on gifts at Christmas? This is ridiculous. It does not make any sense at all and something is very wrong here.

First of all, why would someone even think of spending hundreds of dollars on gifts, when they are one paycheck away from a financial disaster. Since 2/3 of Americans have no savings, what happens when their car breaks down? Or they get sick and have unexpected medical bills? Or how would they ever plan on retiring with only a few thousand dollars to their name. Those Christmas toys can’t be sold for extra cash, and in fact will probably be worthless within a matter of weeks.

Would it not be so much better to maybe take a portion of the money that would otherwise be spent at the holidays and invest it? Or just take some money and start a savings account. You do not need to totally cut out the shopping and not buy any gifts, but maybe the average American can take say a quarter of the $800 (so take $200) and invest it. Or start that emergency savings account.

Invest as a Christmas gift

If you decide to take this approach, it can even still be presented to a child or recipient as a gift. Imagine opening a account and/or buying a mutual fund for a child, and presenting it to them as a Christmas gift for their future. The kid will not only then have some form of investment to follow, but they may become interested in investing in general and continue to do this throughout the year. Doing this small thing can present the child with a great learning opportunity.

If the kid is given shares in a mutual fund (or even an individual stock) as a Christmas gift, it will almost always peek their interest. If you give a kid a few shares of Mcdonalds, they will now “own” a portion of that company. Maybe they will start to wonder what else they can own/invest in, and it can be fun for them. Maybe they will want to buy some of Wal-Mart or Facebook or some other company. Giving an investment as a present can be though of as the “gift that never stops giving”.

Taking this small step of investing rather than buying some Christmas toy that will just go out of favor or break is a great opportunity. This concept not only applies to kids, but if you are one of the families that only has $5000 in a retirement account, you too can also participate. Buy the mutual fund for your spouse/partner/significant other. It can then get that person interested in saving and investing as well. Then maybe they can start off the new year with an increased interest on building up their retirement accounts.

Or put a couple hundred dollars into a savings account and present it to your significant other as a Christmas present. We can guarantee that when they have an unexpected bill (and they will eventually have one) they will be so thankful that you did this for them.

So just use some of that $800+ and save and/or invest it this holiday. It will make you feel good, and the person your present it too will also be very thankful as well.